Nortel Provides Update on Allocation Protocol Motion

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June 20, 2011

TORONTO - Nortel Networks Corporation [OTC: NRTLQ] announced today that the Ontario Superior Court of Justice (the Canadian Court) and the U.S. Bankruptcy Court for the District of Delaware (the U.S. Court) have directed Nortel, Nortel Networks Limited and its other Canadian subsidiaries that filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA), the Nortel U.S. entities that filed for similar protection under Chapter 11 of the U.S. Bankruptcy Code, the Nortel entities under administration in the U.K. and certain other EMEA jurisdictions, as well as certain other parties, to participate in a joint mediation of the issues raised in the motions heard by the two courts on June 7, 2011. The Canadian Court and U.S. Court together will appoint a sole mediator by supplemental order. The directions also provide that the mediator shall determine the time, date, place and protocol of the mediation. If the parties agree, the mediator will have expanded authority to conduct an arbitration in respect of this matter.

The directions were made pursuant to motions filed in the Canadian Court and U.S. Court that had sought orders establishing an allocation protocol regarding the allocation of sale proceeds from the sales of Nortel’s businesses and patent portfolio. The motions were heard at a joint hearing of the Canadian Court and U.S. Court on June 7, 2011 and the decisions of both courts are currently under reserve. While the decisions are pending, the Canadian Court and U.S. Court concluded to direct the parties to mediation, as set out above, to attempt to progress these matters to ultimate resolution.

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